The Economic Consequences of Foreigner Rules in National Sports Leagues

Abstract

This paper provides a contest model of a professional team sports league and analyzes the impact of a restriction on foreign players. It shows that a league with binding restrictions on foreign talent for all clubs is more balanced than a league without binding restrictions on foreign talent. Moreover, the wage level of domestic (foreign) talent is higher (lower) in a league with a binding restriction on foreign players. Finally, a tighter restriction on foreign players increases profits of all clubs.Team Sports Leagues, UEFA's Homegrown Rule, FIFA's 6+5 Rule, Competitive Balance, Player Salaries